Consumers Groups ask FTC to undo CVS – Caremark merger

Posted Apr 15 2011 4:23pm

Harms to competition, and to consumer choice, cost, and privacy cited.

Community Catalyst joined Consumer Union, US Pirg, the National Consumer Federation, and NLARx to ask the FTC to order CVS-Caremark to undo the four year old merger between the CVS pharmacy chain and Caremark, one of the nations largest pharmacy benefits managers.

The letter, covered in today’s New York Times , describes how CVS has used their role as a pharmacy benefit manager (which simply tells a pharmacy whether your health plan covers your prescription or not) to gain customers over other pharmacies. The letter notes how recent investigations by the FTC and 24 Attorneys General highlight a number of unfair practices designed to switch consumers to CVS pharmacies.

For instance, CVS-Caremark has allegedly charged consumers higher co-payments at non-CVS pharmacies. Also, by listing the organization’s full name “CVS Caremark” on the benefits card provided to beneficiaries of the health plans Caremark serves, some consumers have been deceived into thinking that they can only fill their prescriptions at CVS pharmacies. Perhaps the most shocking conduct is the alleged practice of the pbm Caremark providing confidential consumer information to their CVS pharmacy operations, which allows the pharmacists “to solicit non-CVS customers by phone and mail in order to direct them to fill their prescriptions at CVS stores.”

The FTC has been investigating the anti-competitive practices of CVS-Caremark since 2009, and may decide soon how to address these alleged violations of anti-trust and consumer protection laws. The letter urged FTC to order the merger to be undone, and force CVS to sell its pbm business. If the FTC decides against ordering the break-up of the CVS – Caremark entity, the letter asks FTC to require strong “nondiscrimination” protections for “consumers and pharmacies from programs … which force consumers to use either Caremark-owned mail order or CVS-owned retail pharmacies and ultimately lead to higher prices for consumers.” The letter also asks FTC to appoint an “independent trustee” to monitor a “stringent firewall between CVS and Caremark” to “protect the confidential information of patients….”

For more info on some lawsuits by pharmacies and consumers concerning these unfair or anti-competitive practices, see Pharmalot’s blog here.